States move closer to GST

The Goods and Service Tax that is on the launch mode for several years is entering on the last phase of its introduction as the last barrier-ratification by states is almost complete. According to the Finance Minister, almost all states except Tamil Nadu has agreed to its implementation.

The bill was passed in the Lok Sabha in May 2015 but is still pending on the Rajya Sabha. According to government sources, the new bill will not have a built in upper cap (rate) suggested by the Congress. Finance Minister Arun Jaitely indicated that such a cap will remove flexibility in the tax structure.

Once GST is ratified by the Rajya Sabha where the Congress is losing its strength, the reform will be implemented across the country.

Interestingly, the lone but major objection came from Tamil Nadu that also not touching any serious differences in the present format contained in the bill. TN has made an opposition on the ground that it will reduce the fiscal autonomy of the sates. But, political observers believe that TN’s opposition is unrelated to GST rather it seeks to get some benefits on some other issues regarding the package the Tamil Nadu Chief Minister has submitted to the Prime Minister.